Comprehensive analysis of the World Trade Organization

Comprehensive analysis of the World Trade Organization Order Instructions: (WTO) and its efforts in the protection of environmental interests and human life and health in line with GATT

Comprehensive analysis of the World Trade Organization
Comprehensive analysis of the World Trade Organization

Thesis, Project and Research Paper:-

For your Final Project, you will submit an Individual project that will consider in detail the legal issues in a trade dispute between WTO member states. Below is the Final Project question.

It has been said that the World Trade Organisation does not pay much attention to issues related to the environment, health and human rights. Its free trade agenda, which is championed by powerful states and backed by strong multinational corporations, is being pursued in a manner that is detrimental to these important social issues. Unless the organization changes its position and addresses these issues, the fate of mankind is very bleak. With the aid of academic writings, the WTO agreements, and the jurisprudence of the panels and Appellate Body critically discuss and evaluate this observation.

For your Individual Project this week, write a proposal outlining the scope of your planned report and describing the materials you intend to use as the basis for your research.

Comprehensive analysis of the World Trade Organization Sample Answer

Comprehensive analysis of the World Trade Organization (WTO) and its efforts in the protection of environmental interests and human life and health in line with GATT Article XX

  1. Introduction

When the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) was completed in 1993, WTO was established, resulting in trade barriers being lowered. GATT also came as a significant international measure for balancing between trade and environmental interests. Members of the GATT also made an agreement, in a meeting to sign the Final Act, to establish a Committee on Trade and the Environment[1].

There has been so much controversy with regard to WTO’s efforts in balancing between trade and non-economic societal issues related to the environment and human life and health. It is contended that the manner in which WTO’s free agenda is pursued by powerful states and strong multinational corporations is detrimental to important non-economic societal issues. This paper explores the various WTO agreements and the jurisprudence of the panels and the Appellate Body in line with Article XX to gauge the extent to which WTO achieves a balance between trade and non-economic societal interests, and any possible reforms to the same.

  1. Research Questions

This research will focus on the following questions:

  1. What is the applicability of Article XX of GATT 1994 on WTO’s goals of balancing between trade and non-economic societal interests?
  2. What is the scope of WTO’s anti-dumping measures and what role do they play in the protection of non-economic societal interests?
  3. What are the contributions of the WTO settlement system in the protection of non-economic societal interests?
  4. Thesis Outline

Chapter 1 will give a brief historical account of the link between trade and non-economic societal interests through GATT 1947 and GATT 1994. This information will introduce the discussion on issues of protection of human life and the environment. Chapter 2 will explore Article XX of the GATT and its applicability in the protection of non-economic societal rights. Chapter 3 will comprise an analysis of WTO dispute settlement systems and their position on the balance between trade and non-economic societal interests. Chapter 4 will involve a conclusion which will summarise the discussions in paper and provide possible recommendations. Each chapter will have an introduction, a discussion of the highlighted issues and a conclusion.

  1. Research Methodology

This study will basically relies on Article XX of GATT, whereby secondary sources such as books, journals, articles, reports, and reviews will be utilized to help in understanding the scope of WTO and the extent to which it balances between trade and other non-economic societal interests such as protection of the environment and the life and health of humans. This research will also apply international debates, including an analysis of several key WTO agreements and the contributions of the WTO dispute settlement panels, the Dispute Settlements Body, and the Appellate Body to the goals of WTO.

  1. Literature Review

Van den Bossche and Zdouc’s submits that Article XX of GATT 1994 allows for the protection of some important non-economic societal values such as public health and the environment. Article XX paragraphs (b) and (g) reconciles between trade obligations and environmental interests executed due to environmental policies. Environmental interests focus on protecting the plant, animal, and human life and health and conserving exhaustible natural resources. These exceptions ensure that member states, under particular conditions, are able to make a preference for environmental goals over liberalization and rules on market access. The two paragraphs are particularly relevant with regard to the protection of human health and the environment. They provide a good ground for justifying the protection of environmental interests against measures which are otherwise not consistent with the GATT 1994 provisions[2].

It is evident that measures which satisfy the conditions provided under Article XX are allowed regardless of their inconsistency to the provisions of GATT 1994. The Panel in US-Section 337 held that some provisions under GATT are limited and conditioned by provisions of Article XX. Although Article XX compels member states to ensure the adoption and maintenance of measures that promote or protect other fundamental societal values, it still limits or exempts affirmative commitments under the GATT 1994. This can be perceived as the reason for Article XX being given significant consideration in the settlement of numerous WTO and GATT disputes[3].

Although there are several arguments that the narrow construction of Article XX implies that its specific exceptions also have to be interpreted narrowly, the Appellate Body has taken a different approach. In the cases of US-Shrimp and US-Gasoline, the Appellate Body showed its inclination to a balance between the general rule and the exception. It takes a narrow approach to interpret the exceptions of Article XX, that is, the exceptions that allow for trade restrictive measures in light of protecting the environment and public health are inappropriate. The Appellate Body advocates for the balancing of trade liberalization and other social values.

The Panel in US-Shrimp, in light of the type of measure which could be justified within Article XX, held that measures with the potential of undermining the WTO multilateral trading system were not justified under Article XX. In addition, the multilateral trading system would be undermined by measures which condition access to the party state’s market for a certain product following the adoption of certain policies by the exporting party state. Upon appeal, the Panel’s decision was rejected by the Appellate Body in line with the scope of measures justified under Article XX.

The Appellate Body has not yet ruled the on the justification under Article XX of measures protecting or purporting to protect societal values or interests out of the territorial jurisdiction of the party state taking the measures. Article XX does not provide for any explicit jurisdictional limitation. Nevertheless, the issue raised in light of this is whether there exists an implied jurisdictional limitation in the sense that parties can invoke the provisions of Article XX for purposes of protecting non-economic societal values out of the territory of any party concerned. In US-Shrimp, the case involved a ban on the import of shrimp yielded through such means that resulted to the incidental killing of sea turtles. It was observed by the Appellate Body that sea turtles migrated to or traversed waters in accordance with the United States’ territorial jurisdiction[4].

Although the Appellate Body’s position on the use of Article XX in protecting and promoting societal values and interests outside the state party’s territory is still unclear, the Panel in EC-Tariff Preferences held that the policy indicated in the Drug Arrangements does not aim to protect human life or health in the European Communities and thus, the Drug Arrangements are not consistent with the provisions of Article XX (b).

Van den Bossche and Zdouc argue that the paragraphs of Article XX contain different requirements regarding the relationship between the measure at issue and the societal value pursued. Article XX contains a two-tier test for the determination of justification of any inconsistency of a measure to GATT provisions. The first requirement is that the measure needs to be consistent with one of the specific exceptions provided under the paragraphs of Article XX. The second requirement is that the application of the measure needs to be consistent with the provisions of the chapeau of Article XX.

In practice, the legal requirements set out by the chapeau if Article XX has played a very significant role in dispute settlement. The Panel and the Appellate Body have turned to these requirements in dealing with controversial decisions. In US-Gasoline, the Appellate Body held that the purpose of the chapeau is to ensure that there is a balance between a measure and societal values. Similarly, in US-Shrimp, the Appellate Body asserted that the chapeau reflects the recognition on the part of WTO members of the requirement to maintain a proper balance between the right to invoke any of the exceptions under Article XX and the substantive rights of the other members provided under GATT 1994. In other words, the chapeau plays a significant role in ensuring that parties do not misuse of abuse the exceptions of Article XX. The Appellate Body perceives the chapeau as a reflection of the principle of good faith that imposes limits on the exercise of rights by states (pg 642). Thus, the measures adopted by states ought not to unjustifiably discriminate between countries in which there are similar conditions, or to restrict international trade in disguise.

The Panel and the Appellate Body pursue the ‘necessity’ test in determining whether the measure can still be justified under the exception provided in Article XX (b). The necessity test comprises of two requirements. First, the policy objective pursued by the measure should be in line with the protection of the life or health of plants, animals or humans. Secondly, the measure should be a necessary requirement for the fulfillment of the objectives of the respective policy. for instance, the Panel in US-Gasoline held that the measure was valid because the party invoking Article XX (b) had shown that the policy with regard to the measure was in line with the protection of the life or health of humans, animals or plants and that the inconsistent measure was a necessary requirement for the fulfillment of policy objectives. Accordingly, the Panel also applied the ‘necessity test’ in the Thailand-Cigarettes case and US-Tuna (Mexico) case. Thus, although WTO members enjoy autonomy in determining their own environmental policies and objectives, they are still limited by the need to adhere to the paragraphs of Article XX of the GATT 1994[5].

The Appellate Body has not yet given its clear view on the balance between anti-dumping measures and environmental protection but it tends to take a narrow approach[6]. Provisional anti-dumping measures that may be imposed may be in terms of provisional duty or security, either by cash or bond, which equals the amount of the anti-dumping duty estimate. It is not supposed to be higher than the provisionally estimated dumping margin. Article VI provides for price undertakings in lieu of imposing anti-dumping duties. The exporter and importer can make an undertaking to make a revision of the prices or stop exports at dumped prices. States are required to apply the “lesser duty” rule whereby the duties are imposed at lower levels than the margin of dumping as long as it is adequate to heal the injury. With regard to environmental protection, the present WTO rules provide that even in cases where the exporting countries do not impose restrictions on their carbon emissions, the social costs of carbon are not supposed to be labeled as dumping. Other members of WTO currently do not have implied rights to impose anti-dumping duties on imports in case the exporting country fails to impose a carbon tax or internalize the complete price of carbon.

 References Cited and Indicative Bibliography

A Walter, “Environmental Protection in the EU and the WTO: Is Article XX GATT in its Present Interpretation Consistent with the Current Standard of Environmental Protection of the EU?.” European Energy and Environmental Law Review 23.1 (2014): 2-20.

AH Qureshi & MD Evans, ‘Extraterritorial Shrimps, NGOs and the WTO Appellate Body’ (1999) 48 ICLQ 199-206.

BJ Condon, ‘The Existence of a Duty to Negotiate in the General Exceptions of GATT and GATS’ (2005) Social Science Research Network.

JL Nissen, “Achieving a Balance between Trade and the Environment: The Need to Amend the WTO/GATT to Include Multilateral Environmental Agreements,” Law and Policy in International Business, (1997) 28, 3.

P Low, “Preferentialism in Trade Relations: Challenges for the World Trade Organization.” (2014).

PC Mavroidis, ‘From GATT 1947 to GATT 1994’ in Trade in Goods (Oxford Scholarship Online,2008).

RF Yearwood. (2012). The Interaction between the World Trade Organization (WTO) Law and External International Law: The Constrained Openness of WTO Law (a Prologue to a Theory). Routledge.

THAILANDCIGARETTES (PHILIPPINES)1. (DS371).

US-Gasoline.

US-Shrimp.

US-Tuna (Mexico).

Van Asselt, BA Marjoleil, E Michelle, & Vos Elle. “Trade versus health and the environment?.” Trade, Health and the Environment: The European Union Put to the Test (2013): 3.

Van den Bossche, P and Zdouc, W. (2013) The Law and Policy of the World Trade Organization: Text, Cases and Materials, 3rd Edition, Cambridge University Press.

WTO, “Technical Information on Anti-Dumping”. Accessed on 3 February 2014, from: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm

[1] JL, Nissen, “Achieving a Balance between Trade and the Environment: The Need to Amend the WTO/GATT to Include Multilateral Environmental Agreements,” Law and Policy in International Business, (1997) 28, 3.

[2] Van den Bossche, P and Zdouc, W. (2013) The Law and Policy of the World Trade Organization: Text, Cases and Materials, 3rd Edition, Cambridge University Press.

[3] BJ Condon, ‘The Existence of a Duty to Negotiate in the General Exceptions of GATT and GATS’ (2005) Social Science Research Network.

[4] PC Mavroidis, ‘From GATT 1947 to GATT 1994’ in Trade in Goods (Oxford Scholarship Online,2008).

[5] AH Qureshi & MD Evans, ‘Extraterritorial Shrimps, NGOs and the WTO Appellate Body’ (1999) 48 ICLQ 199-206.

[6] WTO, “Technical Information on Anti-Dumping”. Accessed on 3 February 2014, from: http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm

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